This report profiles India’s metals and minerals industry, discussing market trends and outlook through 2015 and beyond. The report also highlights leading players in the sector including Hindalco Industries Ltd, Hindustan Zinc Ltd and Hindustan Copper Ltd.

The Indian metals and minerals sector is one of the important constituents of economic growth in India. The country has been a major global player in minerals and metals in terms of manufacturing, consumption and trading in the last few years. India is ranked amongst the world’s largest producers of aluminum and zinc. The sector comprises mining, production and trading companies. The big metals players dominate the industry and thus form a sort of oligopoly.

FY15 was a tough year for the sector despite an increase in production and demand, primarily due to lower global commodity prices. The global situation for metals and minerals was also adverse with spot prices of several metals going south. The value of India’s mineral production saw a decline as a result of the prevailing global situation. However, growth in demand brought some relief to the sector. The index for production of basic metals recorded a steady growth, while mining finally registered growth in 2015-16 after three successive years of decline.

The outlook for metals and mineral sector looks stable in the near-term because of a demand uptick and decline in inflation. Low per capita metal consumption, vast mineral resources and growing construction sector will act as drivers for the sector in the long-term. Reforms and clearances in the mining sector will further add to the growth of this sector.

Key Points:

• During FY09-13, the metallic minerals segment grew at a CAGR of 16%. However, it recorded a steep y/y decline of 14% in FY14. It further declined by 1% y/y in FY15. The non-metallic minerals segment grew at a CAGR of 18% during 2009-13, but also saw a decline in FY14. However, it recorded a growth of 1% y/y in FY15.

• During 2008-13, domestic production capacity of aluminium grew at a CAGR of 7.4% while the actual production grew at a CAGR of 6.8%. Production saw a steep decline in FY14; but revived in FY15 with a growth of 5% y/y.

• The index of industrial production (IIP) saw a decline of 0.1% in FY14. Basic metals grew by only 0.3%, while mining declined by 0.8% y/y. However, the industry saw a revival in FY15. Basic metals recorded a five-year high growth of 12% y/y, while mining finally registered growth after three successive years of decline. Growth was also steady in 1HFY16, with mining growing by 2% y/y and basic metals growing by 5% y/y.